In-House Financing: How it works, Alternatives, Pros & Cons

In-house financing is a concept of providing financial assistance to consumers when they visit a store for buying products. It has some pros and cons.

in-house financing

Have you ever faced a company that provides in-house financing while purchasing something? Whenever you visit any shop that sells consumer durables like electronic gadgets, cars, pieces of jewellery, etc., you may find some shops with third-party lenders. Whereas there are also shops where you do not find any such third-party financers, they can still offer financial assistance to their consumers.

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This happens due to having their own in-house financing facility. Generally, it is an initiative of a particular company to increase its revenue by expanding the business. Apart from selling goods, such companies are also ready to finance consumers. As a result, the consumers also become happy as they need not take extra trouble to find someone else for financial assistance.

Certainly, there are some alternatives of such financing option also. So, before you ask for in-house financing, let us know everything about the concept.

What is In-House Financing?

To ease the consumer when the company takes full responsibility by financing the person as a small loan and disbursing the loan without scrutinizing necessary parameters, it is known as in-house financing. Instead of hiring a third party financing body, the company whose product a consumer is buying provides money in the form of a loan. In this case, the consumer becomes a borrower, and the seller becomes the lender also.

Generally, the seller used to help by financing a consumer to purchase the goods. But it is in the form of a loan. Unlike any other debt, the buyer requires to repay the entire lent money to the seller. While lending money, the seller hardly looks for credit score or even other necessary parameters. As it is not a formal borrowing so, there is no such paperwork.

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How does In-House Financing operate?

As mentioned earlier, a seller hardly evaluates the necessary parameters like credit score, repayment history, income standard, and many more during in-house financing. Instead of that, some sellers may ask for a nominal amount of down payment to the buyer. By fixing a particular repayment tenure with a fixed rate of interest, the seller used to sell the product.

Sometimes, this type of company that manufactures both products and finance consumers usually calls such in-house financing bad credit finance. This is because people who have suffered from bankruptcy and bad credit score also get such financial assistance. In most of the cases, the selling company may also advertise as ‘We do not check credit score’ just to attract more consumers.

Therefore, if you are looking for loans for a bad credit score with no broker, this type of in-house financing is ideal.

Advantages and Disadvantages of In-House Financing

According to financial advisors, this particular financing concept has both some pros as well as cons. Before applying for it, one must know everything.


  • One of the quickest loan disbursal

After applying for financial assistance online, the seller may approve the loan faster than ever. So, if you are in urgent need of money, apply for in-house financing without thinking much. When your loan is approved, eventually, you will get the necessary goods at once.

  • No matter even if have a bad credit score

A seller hardly concerned about the credit score of a buyer. Even if he has a bad credit score, it does not mean he will not get financial assistance from a seller. This is the main reason why people feel comfortable with in-house financing instead of any other unsecured loan.

  • Flexibility in repayment

One can choose repayment tenure as per his wish. The seller will not decide the repayment tenure as well as he will not decide the monthly instalment. There is utmost flexibility in deciding the repayment period and instalment amount.


  • High rate of interest

“To earn more, a goods selling company used to offer financial assistance”, says renowned financial analyst J. Birmingham. In his tone, there is very much hatred for such in-house financing companies. According to him, these companies only want to earn money, and for this reason, they used to trick people. By showing them the greed of no credit check, actually, they are using those people to increase their revenue.

  • Only applicable for purchasing goods

Along with a high rate of interest, this type of financing option has a limitation. Even if you need money, you can’t get it without purchasing any goods. To be more specific, the seller will lend you that particular amount of money which is the price of your purchased product. So, if you think that you can get financial assistance even if you do not purchase anything, it is wrong.

Alternatives to In-House Financing

Many people would like to stay away from this type of financial assistance by analyzing all these cons. Rather, they like to get financial help from the following authorities.

Direct lenders

Instead of in-house financing, it is better to choose direct lenders like financial intermediaries, credit card companies, credit unions, etc. They do not ask for a high-interest rate. SCCU’s convenient and secure online banking, mobile banking, and e-Services allow you to save time and hassle. Learn more on SCCU about what is a credit union.

Dealers as financers

Although there is a middle man in between borrower and lender, dealers do not ask for any extra interest rate.

Instead of getting financial assistance from in-house financers, these two types of financing bodies are better. So, if you want to get financial help, then always choose wisely and make sure you are not borrowing from in-house financers.